There’s a nice post on payday loans by New School professor Lisa Servon on the New Yorker Currency blog this week. She tells the story of Azlinah Tambu, a single mother in Oakland, CA who took out a series of payday loans, knowing she wouldn’t be able to pay them back on time and will end up repaying far more than she borrows. There’s no question Tambu is as informed a consumer of these types of loans as you could find: she has worked as a teller for a payday lender. In relating Tambu’s struggle to repay, Servon makes two really important and related points.

First, current debates focus too much on the need for regulation to curb the abusive practices of payday lenders rather than seeking to understand the financial lives and motives of the people taking out these loans, despite their high cost.

Second, when we overlook the demand side, we skirt a difficult conversation about the fact that many Americans are less and less able to make ends meet, and not just workers at the lowest-end of the pay scale. One reason, among many, we are seeing in the US Financial Diaries research is income volatility—even households who have jobs experience wide swings in income month-to-month that are beyond their control. For these households, who have little savings and poor or maxed out credit, taking out payday loans, no matter how costly, may be the only option they have.

Servon concludes:

Tambu is still paying back the loans she obtained to fix her car last summer, visiting each of her five lenders on Wednesdays, her payday, and paying them twenty dollars each. When I asked Tambu whether, given her experience, she thought payday loans should be illegal in California, as they are in New York, she told me, “No, I think they should still exist. You know it’s undoable to take out five loans and be able to pay them back. But sometimes you have no choice. The reason I’m working so hard to pay these loans back is that I want to be in good standing, in case I ever need another one.”